Does
BrokerCheck Do More Harm Than
Good? (Financial Advisor IQ) Many
broker-dealers have voiced the opinion that because even unfounded customer or
employer complaints can be included in BrokerCheck records, they can indeed be
more harmful than helpful. But Finra believes BrokerCheck's potential to save
investors from unscrupulous broker-dealers more than makes up for any
broker-dealer having a false claim listed in their
record.

SEC
Moves Quickly To Shut Down Fake Pre-IPO Share
Scam (SEC Litigation Release No. 24144)
The SEC filed a Complaint in the United States District Court for the Central
District of California allleging that Keenan Gracey with the fraudulent sale of
purported pre-IPO shares in Perspecta, Inc., a new company that will be formed
as a result of the merger of three other companies. The Complaint alleges that
Gracey used publicly available information about the merger and false claims
about his supposed connections with the companies to tout 60 time returns. The
SEC obtained an asset freeze and a temporary restraining order to halt the
offering.

FINRA
Stretches Definition Of Participating In A Private Securities Transaction (BrokeAndBroker.com
Blog) What's a lot? What's reasonable? How many times is frequently? When is
enough, enough? What does it mean to participate? These and other mysteries of
the Universe keep BrokeAndBroker.com publisher Bill Singer awake through the
night and into the early morning. You are able to sleep soundly because of the
unselfish efforts of folks like Bill who man the ramparts of philosophical
thought and aimless rumination. In today's blog, Bill has tanked up on coffee
after spending staying awake to ponder whether hand delivering a check rises to
the level of participating in a private securities transaction. Bill is also
wondering how his New York Mets started off with 11 wins and 1 loss and now
have a record of 20 wins and 19 losses.

FINRA
Department of Enforcement, Complainant, vs Francisco Jose Ortiz,
Respondent (Order Accepting Offer of Settlement, FINRA
Office of Hearing Officers, May 14, 2018) (the "Order"). In
accordance with the terms of the Order, FINRA imposed a $5,000 fine and a
one-month suspension from association with any FINRA member in all capacities.
Francisco Jose Ortiz allegedly processed a customer wire transfer based on
email instructions despite knowing that an unknown imposter had compromised the
customer's email account and that the wire request was fraudulent. In order to
process the wire transfer, Ortiz falsely represented on a Wells Fargo Advisors
LLC wire transfer request form that the request had been orally confirmed with
the customer causing WFA's books and records to be
inaccurate.

In
the Matter of Industrial and Commercial Bank of China Financial Services LLC,
Respondent In accordance with the terms of the AWC, FINRA
imposed upon ICBCFS a Censure, a$5,300,000 fine; and the firm agreed to various
undertakings involving the retention of an Independent Compliance Consultant
Allegedly, ICBCFS's anti-money laundering program was not reasonably designed
to detect and cause the reporting of potentially suspicious transactions with
respect to this new business line. Despite clearing and settling the
liquidation of more than 33 billion shares of penny stocks, ICBCFS did not have
in place procedures reasonably designed to ensure that penny stock transactions
were sufficiently scrutinized for potentially suspicious
activity.

Arizona
Men Charged In Manhattan Federal Court With $23 Million Fraud And Money Laundering
Scheme In Connection With Purported Fundraising For Numerous Scam Political
Action Committees (DOJ Press Release) William Tierney a/k/a
"Bill Johnson," and Robert Tierney were each charged in a complaint filed in
the United States District Court for the Southern District of New
York with one count of wire fraud conspiracy; mail fraud conspiracy;
conspiracy to commit money laundering; and conspiracy to engage in monetary
transactions in property derived from specified unlawful activity in connection
with their alleged fraud of tens of thousands of donors to at least
nine political action committees that they controlled, operated, and influenced
and for which they raised over $23 million between 2014 and 2017, and
more than $50 million in the past 10 years. Prosecutors allege that virtually
all of the funds raised was either paid to the scheme participants or
used to perpetuate the fraud through additional telemarketing, fundraising, and
overhead expenditures.

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SEC
Charges California Investment Adviser in Multi-Million Dollar Fraud
(SEC Litigation Release No. 24142) In a Complaint filed in the United
States District Court for the Central District of California, the SEC alleged
that William M. Jordan had fraudulently raised over $71 million from about 100
advisory client through a scheme involving overstating the value of the assets
in several of his 16 private investment funds. Jordan settled the action by
consenting to the entry of a permanent injunction without admitting or denying
the allegations of the complaint.

SEC
Charges Owner of Alternative Investment Firm in Belize Airport Financing
Scam (SEC Press Release 2018-89) In a Complaint filed in the United
States District Court for the Southern District of New York, the SEC alleged
that between 2014 and 2017, Brent Borland sold over $21 million of promissory
notes to dozens of investors, promising that the funds would be used as bridge
financing for development of an international airport in Placencia, Belize, and
that the investments would be protected by pledges of real estate as
collateral. The notes were sold through Borland Capital Group LLC,
which purports to be active in "alternative investment," and Belize
Infrastructure Fund I, LLC, which purports to be in the business of
construction finance. The Complaint alleges that Borland diverted $6 million of
the investors' funds for personal, non-business expenses such as mortgage and
property tax payments on his family's Florida mansion, multiple luxury
automobiles, private school tuition for his children, $36,000 for his family's
beach club membership, and almost $2.7 million to pay off credit cards.
Borland's wife, Alana LaTorra Borland, and a corporation controlled by Borland
and his wife, Canyon Acquisitions, LLC are named as relief defendants. In a
parallel action, the U.S. Attorney's Office for the Southern District of New
York announced criminal charges against Borland.

SEC
Charges Brokerage Firms and AML Officer With Anti-Money Laundering Violations
(SEC Press Release 2018-87) The SEC settled charges against
broker-dealers Chardan Capital Markets LLC and Industrial and Commercial Bank
of China Financial Services LLC (ICBCFS) for failing to report suspicious sales
of billions of penny stock shares.From October 2013 to June 2014, Chardan, an
introducing broker, allegedly liquidated over 12.5 billion penny stock shares
for seven of its customers and ICBCFS cleared the transactions. The
SEC alleged that Chardan failed to file any SARs notwithstanding red flags, and
that ICBCFS similarly failed to file any SARs despite ultimately prohibiting
trading in penny stocks by some of the seven customers. The SEC's orders found
that Chardan and ICBCFS violated the Exchange Act and an SEC financial
recordkeeping and reporting rule and that Chardan's anti-money laundering (AML)
officer, Jerard Basmagy, aided and abetted and caused the firm's violations.
Also, ICBCFS was found to have failed to produce documents promptly to SEC
staff. Without admitting or denying the SEC's findings, the parties
agreed to settlements requiring Chardan to pay a $1 million penalty, ICBCFS to
pay $860,000, and Basmagy to pay $15,000. Both firms consented to
censures and, along with Basmagy, to cease and desist from similar violations
in the future. Basmagy also agreed to industry and penny stock bars
for a minimum of three years. READ the FULL TEXT SEC
ORDERS

The
Disqualified Stalking Felon Stockbroker, The Texting Stockbroker, The Missouri
Waltz, And FINRA (BrokeAndBroker.com Blog) A statutorily disqualified
individual sells her book of business and it is assigned to a duly registered
stockbroker. So far, so good. The stockbroker's firm tells him it's okay to
communicate with the disqualified broker in order to arrange for the smooth and
orderly transfer of clients but, beyond that handing off of her biz to you, you
draw a thick, red line and don't cross it. She's disqualified. You're not. You
don't discuss any private customer information with her. So . . .
what could possibly go wrong with that scenario?

Investment
Advisor Sentenced to More Than 5 Years in Prison for Misappropriating $6.5
Million in Client Funds (DOJ Press Release) HCM Assett Management LLC
investment advisor owner Henry Meyer pled guilty to one count of mail fraud and
was sentenced in the United States District Court for the Northern District of
Illinois to 69 months in prison and ordered to pay $6.5 million in restitution.
Meyer fraudulently solicited investors (who were mostly family members and
friends, some of whom were elderly) for a non-existent "European Derivative
Investment Program" promising returns as high as 600%. Meyer diverted funds to
pay personal expenses, including rent, utilities, restaurants, trips, and car
payments.

Former
Bank Branch Manager Charged In $5 Million Fraud Involving Two New York Area
Banks (DOJ Press Release) Former bank branch manager Moshe Benenfeld
a/k/a "Michael Benenfeld" was charged in a criminal Complaint in the
United States District Court for the Southern District of New York with one
count of bank fraud involving hundreds of unauthorized transactions at two
different banks. As a result of the Benenfeld's alleged unauthorized
transactions, one of the banks purportedly sustained in excess of $5 million in
losses.

Houston
Firm Ordered to Stop Fraudulent Crypto
Offering (TSSB
Press Release) The Texas State Securities Board entered an Emergency
Cease and Desist Order to stop Wind Wide Coin Inc. and three sales agents from
fraudulently offering investments in a cryptocurrency trading program that uses
an "automatic trading bot" and purports to combine " "no risk" and
extraordinarily high returns. Wind Wide Coin's marketing extends to a rotating
sequence of celebrity and political endorsements. TSSB alleges that the
company's website has featured a photograph of Jennifer Anniston, but
identified her as "Kate Jennifer," an investor and a photograph of Prince
Charles, who was identified as "Mark Robert," another investor who provided a
testimonial. The testimonial was then attributed verbatim to a "Johnson Smith,"
supposedly a U.K. investor. The office address provided by Wind Wide Coin is
for a location at which no building of any kind
exists.

SEC
Files Charges in International Manipulation
Scheme(SEC Press Release 2018-85)The SEC
filed a Complaint in the United States District Court for the Southern District
of New charging Francisco Abellan Villena, Guillermo Ciupiak, James B. Panter
Jr., and attorney Faiyaz Dean with violating antifraud and registration
provisions of the federal securities laws. The Complaint alleges that the
defendants manipulated the market for and illegally sold the stock of microcap
issuer Biozoom Inc. through hidden ownership, offshore accounts, nominees, and
through resort to manipulative trading techniques to artificially inflate
Biozoom's share price in a manner that reaped nearly $34 million in unlawful
proceeds. Separately, the SEC charged two registered representatives for their
roles in the unregistered sales of Biozoom stock and a brokerage firm for
supervisory and recordkeeping failures. Previously, the SEC obtained
a judgment against Abellan for his role in another market manipulation
scheme

Colorado
Court Shuts Down FINRA Over Expungement
Confirmation(BrokeAndBroker.com Blog)
You ever go to a meeting where it seemed that everyone showed up on time, they
started the presentations at the designated hour, and then, just as things
began to roll, some idiot executive walks in late? Can someone please get me a
cup of coffee, two sugars, a little milk, and, if there's a warm cheese danish
left, I'll take that, otherwise, I'll take anything with cinnamon. Oh, where's
the nearest outlet, I need to plug in my phone. Thanks -- please, don't allow
me to interrupt anything. Did we already cover Item One in the agenda? You did?
Sorry but could you just catch me up, briefly. Did we place orders for lunch
yet? Yeah, there's always that idiot. Speaking of idiots arriving late and
messing things up for everyone, consider a recent FINRA expungement arbitration
in which the industry Claimant wins but FINRA decides to intervene by way of a
partial objection in court to the confirmation of the
award.

Recidivist
Securities Fraudster Edward Durante Sentenced To 18 Years In Prison For
Securities Fraud, Money Laundering, And Perjury
Offenses(DOJ Press
Release) When we talk about a long and checkered career, it is hard
to imagine a better example than that of Edward Durante a/k/a "Ted Wise," a/k/a
"Efran Eisenberg," a/k/a "Yulia," a/k/a "Ed Simmons." In 2001, Durante was
sentenced to 121 months in prison, ordered to pay over $39 million in
disgorgement and interest, and was barred from certain activities in the
securities industry following his convictions for conspiracy to commit
securities fraud, wire fraud, and money laundering, as well as making false
statements in connection with a market manipulation scheme in which the
defendant also used the alias "Ed Simmons." After his release from
prison, between 2009 and March 2015, Durante and his co-conspirator
fraudulently induced at least 100 victims to invest over $15 million in private
shares of VGTL, whose share price the conspirators manipulated. In August 2016,
Durante, now 64 years old, pled guilty in the United States District Court for
the Southern District of New York to to conspiracy to commit securities fraud,
securities fraud, money laundering, and perjury and was sentenced to 215 months
in prison plus three years of supervised release and ordered to forfeit
$15,404,231.

Recidivist
Defendant Pleads Guilty To Defrauding A Native American Tribe And Various
Investors Through The Fraudulent Issuance And Sale Of More Than $60 Million Of
Tribal Bonds(DOJ Press Release) I'm guessing
the folks at the United States Attorney's Office for the Southern District of
New York are up to the letter "R" in their "Improve Your Word
Power in 30 Days" book because this is the second press release today to
have a headline beginning with "Recidivist." On September 28, 2016,
Gary Hirst was convicted following a jury trial for manipulating the market for
shares of NYSE-listed Gerova Financial Group, Ltd. and he was sentenced to 78
months in prison. Be that as it may Gary Hirst has now pled guilty to guilty to
conspiracy to commit securities fraud, securities fraud, investment adviser
fraud, and conspiracy to commit investment adviser fraud in connection with his
scheme to defraud a Native American tribal entity and various investment
advisory clients of tens of millions of dollars in connection with the issuance
of bonds by the tribal entity and the subsequent sale of those bonds through
fraudulent and deceptive means. In addition to Hirst's guilty plea,
Jason Galanis was sentenced to 173 month in prison following his guilty plea to
one count of conspiracy to commit securities fraud, one count of securities
fraud, and one count of conspiracy to commit investment adviser fraud. Hugh
Dunkerley pled guilty to one count of conspiracy to commit securities fraud,
two counts of securities fraud, one count of bankruptcy fraud, and one count of
falsification of records with the intent to obstruct a Government
investigation, and he is awaiting sentencing. Defendants John Galanis, Michelle
Morton, Devon Archer, and Bevan Cooney are awaiting trial and are presumed
innocent unless and until proven guilty in a court of law beyond a reasonable
doubt.

Broker
Representative and Investment Adviser Indicted for Scheme to Defraud
Investors(DOJ
Litigation Release No. 24140) On May 2, 2018, Leon Vaccarelli, a defendant in
an ongoing SEC litigation, was indicted in a parallel criminal proceeding in
the United States District Court for the District of Connecticut on multiple
counts of mail fraud, wire fraud, and money laundering. As previously alleged
in the SEC Complaint, Vaccarelli,fraudulently persuaded several elderly
customers to invest with him but he allegedly deposited customer funds into his
personal and business bank accounts. Allegedly, Vaccarelli asked one customer
to sign an agreement that she would not provide certain information to FINRA or
the SEC.

No
Show No Way No How Public Customer FINRA
Arbitration(BrokeAndBroker.com Blog) You know how you plan for months for a big
party and then you send out invitations, and some folks don't get back with a
"yes" or a "no" and others ask if they can bring a guest
and then, the day of the party, there's a hurricane, so virtually no one can
get to your house and even if they did, the caterer couldn't make it, and, of
course, a few folks who told you that they couldn't come show up because they
lost power to their house and figured since you were having a party and you had
asked them that they may as well show up given how the storm had forced them
out of their home? Yeah, I know, we've all been through that, right? Anyway, so
. . . we got this FINRA arbitration in which a customer is seeking some
$108,000 in losses and hired a lawyer but then his lawyer withdrew and a lawyer
for some respondents withdrew and some of the respondents either got dismissed
or filed for bankruptcy or got expelled by FINRA and then the public customer
asks FINRA for help and, well, you've heard that whole thing before,
right?

Founders
Of Cryptocurrency Company Indicted In Manhattan Federal Court With Scheme To
Defraud Investors / Government
Recovers Digital Funds Worth More Than $60 Million(DOJ Press Release) Ohrab Sharma a/k/a
"Sam Sharma," Raymond Trapani a/k/a "Ray," and Robert Farkas a/k/a "RJ," a/k/a
"Bob," co-founders of a Centra Tech, Inc. ("Centra Tech"), a company that
purported to offer cryptocurrency-related financial products were indicted in the
United States District Court for the Southern District of New York on
one count of conspiracy to commit securities fraud; one count of conspiracy to
commit wire fraud; one count of securities fraud; and one count of wire fraud.
The charges arose in connection with the Defendants' alleged scheme to induce
victims to invest millions of dollars' worth of digital funds for the purchase
of digital currency tokens issued by Centra Tech. Following the Defendants'
arrests, this Office and the Federal Bureau of Investigation seized 91,000
Ether units worth over $60 million and representing digital funds raised from
victims. The SEC has filed a parallel civil action against Sharma, Trapani, and
Farkas.

In
the Matter of Gary C. Snisky (SEC ALJ Initial Decision; Init. Dec. Release No. 1251;
Admin. Proc. File No. 3-17645) On February 5, 2015, Gary C. Snisky pled guilty
to committing mail fraud and to engaging in monetary transactions in property
derived from mail fraud, which resulted in $5,226,965.93 in investors' losses.
He was sentenced to two concurrent eighty-four month terms of imprisonment, and
ordered to pay $2,531,032.22 restitution. On August 11, 2016, a default final
judgment in the form of a permanent injunction was entered against Snisky. In
consideration of the criminal and civil cases, the SEC barred Snixky from
association with a broker, dealer, investment adviser, municipal securities
dealer, municipal advisor, transfer agent, or nationally recognized statistical
rating organization.

Moshe
Marcel Ajdler, Plaintiff/Appellant v.
Province of
Mendoza Defendant/Appellee(Order,
United States Court of Appeals for the Second Circuit, 17-CV-2704 / May 11,
2018)Because existing New York law does not clearly settle whether
claims for interest on principal continue to accrue after a claim for the
principal itself is time‐barred, 2Cir certified questions pertaining to that
issue to the New York Court of Appeals, deferring the federal court's
resolution of this appeal in the interim.

FINRA
Arbitrator Recommends Multiple Expungements For Veteran
Stockbroker (BrokeAndBroker.com Blog) It seems that each
week there are increasing numbers of arbitrations filed with FINRA seeking
expungement of various matters from a registered rep's industry record. Must be
bringing in a nice chunk of change to the self-regulatory-organization via
filing fees, membership fees, hearing fees, and the like. Of course, given the
explosion of such cases, we should also be asking if these matters truly belong
before an arbitration panel and not within the regulatory framework. Why is it
that so many disclosures are being deemed non-disclosable? Why are so many
allegations being questioned and rejected? Should there be more scrutiny of
customer allegations and employer claims before they are carved into a industry
employee's record? Should we be concerned that too much is being removed from
the public record? Is anyone asking either of those questions?

Tossing
Fish and Catching Capital: Remarks at the Washington State Bar
Association (Speech by SEC Commissioner Hester
Pierce) This is why I'm often puzzled when investor
protection is presented as somehow in opposition to capital formation. The
SEC's tripartite mission-to facilitate capital formation, protect investors,
and maintain fair, orderly, and efficient markets-works as a cohesive whole. No
one mandate is in tension with another, and focusing on one doesn't mean
sacrificing another. While investor protection means deterring and punishing
truly bad actors, it also means not erecting barriers that prevent investors
from accessing investment. Facilitating capital formation means, in part,
facilitating investor
opportunity.

Dominican
National Pleads Guilty to International E-Mail Impersonation and Fraud
Scam (DOJ Press Release) Federal prosecutors alleged that
from at least June 2015 through November 2017, Leonel Alexis Valerio Santana conspired
with others to defraud at least 95 victims by pretending to be employees of the
Securities and Exchange Commission and demanding in excess of $1.3 million from
victims. Upon receipt, the conspirators generally withdrew the funds it from
bank accounts and forwarded much of it to individuals in the Dominican
Republic. Valerio Santana pled guilty in the United States District Court for
the District of Massachusetts to conspiracy to commit money laundering and
conspiracy to commit wire fraud. At least 25 of the cited returns used the
names and social security numbers of individuals with cerebral palsy who did
not need to file tax returns and 386 of the returns used the identities of
incarcerated individuals, and in both situations, the individuals did not
authorize Lasset to file their tax returns. The cited returns claimed
earned income tax credits based on false claims of earning income as "household
help" employees, and falsely claimed education credits designed to reimburse
college and other higher education expenses. Lasset pled guilty tin the United
States District Court for the Southern District of Florida to one
count of wire fraud and one count of aggravated identity
theft.

Tag Cloud

BILL SINGER is a lawyer who represents securities-industry firms, individual registered persons, Wall Street whistleblowers, and defrauded public investors. For over three decades, Singer has represented clients before the American Stock Exchange, the New York Stock Exchange, the Financial Industry Regulatory Authority (formerly the NASD), the United States Securities and Exchange Commission, and in criminal investigations brought by various federal, state, and local prosecutors. He has the distinction of representing witnesses during Congressional investigations. In 2015, Singer achieved a significant award in excess of $1 million from the Securities and Exchange Commission on behalf of a whistleblower client.

Singer is presently Of Counsel to a law firm and the publisher of the BrokeAndBroker.com Blog, which was rated as one of the industry's top eight destination websites and the leading legal/regulatory blog by "Investment News."

Before entering the private practice of law, Singer was employed in the Legal Department of Smith Barney, Harris Upham & Co.; as a regulatory attorney with both the American Stock Exchange and the NASD (now FINRA); and as a Legal Counsel to Integrated Resources Asset Management. Singer was formerly Chief Counsel to the Financial Industry Association; General Counsel to the NASD Dissidents' Grassroots Movement; and General Counsel to the Independent Broker-Dealer Association. He was registered for a number of years as a Series 7 and Series 63 stockbroker.

Singer regularly appears as a commentator on television and radio, and is frequently quoted in the press. He is an outspoken critic of ineffective regulation and an advocate for economic and political sanity.